Retailers discounted prices deeper than ever during the Christmas trading period, a survey by Ernst & Young has discovered.
Cuts as deep as 80 per cent were seen on the high street, with 70 per cent markdowns a common and widely-accepted level of discount.
Overall, the study found, peak season pricing tactics "varied hugely in depth, timing and type of discount".
And with such high levels of promotional activity in certain sectors, it is now difficult to define when a store is has a sale or not, E&Y said.
Care must be taken to avoid following the US route which has resulted in continued price reductions, it went on to warn.
Tim Sleep, director of retail at E&Y said: "The subdued consumer climate, widespread price deflation and intense competition have led to higher levels of markdown than ever before. Half price offers are no longer considered a deep dis-count by customers.
"End of season clearance events will always be a part of the retail landscape, but with the difficult trading conditions at the moment, they must be used as part of a robust pricing, ranging and sourcing strategy."
The key findings of the survey revealed that:
* Markdown levels of 70 per cent or more are now widely in use. However, the spread of markdown levels is now greater than ever before - markdowns as shallow as ten per cent and as deep as 80 per cent were seen.
* Overall, pre-Christmas discount levels averaged at approximately 33 per cent off the full selling price. Post Christmas, the average was approximately 55 per cent off.
* Different promotional techniques were deployed at different times across the Christmas trading period.
Multi-buys in the last week of November gave way to more conventional promotions and markdowns through the remainder of the Christmas period. All-store promotions were more widespread than in prior years, especially among department stores.
* December 15 was the "break date" for the majority of stores to go on sale.
* The timing and depth of discount/promotion varied widely across sectors. For example, footwear retailers were the first to go on sale, followed by clothing.
Jason Gordon, price optimisation specialist at Ernst & Young, said: "Winners at Christmas were able to control in season stock levels in conjunction with a well defined initial price, promotion and clearance strategy.
"It is clear that the concept of a one size fits all pricing strategy is no longer effective. The key for UK retailers will be to avoid the constant downward trend that we have seen in the US, by adopting a yield management approach.
"In 2006, UK retailers need to be more analytical in the management of promotions and markdowns.
"We're likely to see earlier discounts when confronted with terminal stock challenges, differential pricing across formats and locations, with perhaps even variable pricing by time of day." ..SUPL:
